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Policy reforms expected to cut electricity rates

The implementation of appropriate policies and reforms will lead to a transparent and competitive energy market and bring down electricity rates, according to the Energy Department.

“It is true that the Philippines continues to have one of the highest electricity tariffs in the ASEAN region. High electricity bills are a constant complaint we all often hear. For investments, this makes us less attractive as a destination for doing business. It means higher overheads for the business. For Filipinos, it means waiting for everyone to come home before switching on the TV. Of course, this does not paint a complete picture,” Energy Secretary Alfonso Cusi said.

Cusi said that unlike some of its ASEAN neighbors, Filipinos pay the true cost of electricity because prices are not kept artificially low by “unsustainable subsidies.”

Cusi said that if one takes a closer look, the annual inflation of electricity prices in the five-year period from 2014 to 2018 is actually lower than the average annual inflation rate.

“So real electricity prices are in fact on its way down... We have a long way to go before our energy prices are as competitive as our neighbors but I believe that by operating a transparent and competitive energy market, we will get there,” the energy chief said.

He cited the case of Manila Electric Co. whose  residential customers have experienced a 4-percent increase in their monthly bills against a 7-percent rise in the consumer price index since 2016, despite the fuel price increases and local currency depreciation.

Cusi said the Energy Department put in place policies and reforms that will have an impact on electricity prices and consumer empowerment.

“Over the last three years, we introduced the mandated competitive selection process [CSPs] for all PSAs [power supply agreements] as well as turned over the operations of our spot market, the WESM [Wholesale Electricity Spot Market] to an independent market operator,” he said.

“We also introduced the voluntary RCOA [retail competition and open access] for customers with monthly peak average demand of at least 750 kilowatts. Again, this seeks to empower the consumer by allowing them to choose who they buy their energy from—eliminating captive customers for distribution units to pass-on generation charges,” he said.

Cusi said that as the Duterte administration is now on its mid-term, the department remains committed to addressing the needs and empowering Filipino consumers by giving them access to reliable and affordable energy as the focal point of its plans and programs.

“The DOE remains committed to putting the Philippine consumer first. Guided by the EPIRA [Electric Power Industry Reform Act of 2001] law, we believe that consumers can be empowered by ensuring a transparent, competitive and rules-based energy market,”  he said.

Cusi said that while the agency is focused on issuing appropriate policies and reforms for consumers, “we must be mindful that energy must be accessible to all Filipinos―from the smallest sitios to the most densely-populated cities.”

“Access doesn’t just mean being able to flick on a light switch whenever you want to. It also means being able to afford the energy you need,” Cusi said.

“At the same time, it is important that we aren’t just implementing stop-gap solutions. Our priorities must take into consideration the long-term energy security of our country. We need dependable and diverse energy resources,” he said.

Topics: Department of Energy , Manila Electric Co , Alfonso Cusi , Wholesale Electricity Spot Market , Electric Power Industry Reform Act
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